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Sorainen Successful for E Energija in Arbitration Against Republic of Latvia

Sorainen Successful for E Energija in Arbitration Against Republic of Latvia

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Sorainen has successfully represented Lithuania's E Energija against the Republic of Latvia in an ICSID arbitration.

E Energija received an award of EUR 3.1 million, following ICSID’s April 8 rejection of Latvia’s appeal for annulment of the tribunal’s 2018 award. According to Sorainen, the award, which is now final, is “recognition that Latvia violated the bilateral investment protection treaty [with Lithuania].”

According to Sorainen, “the arbitral award in the E Energija case was the first award on the merits in the ICSID case against Latvia. After arbitration lasting eight years, the arbitral tribunal ordered Latvia to compensate the Lithuanian investor for losses unjustly caused with regard to investments in Rezekne city central heating companies. As a result of arbitrary actions by Rezekne municipal institutions ‒ namely, canceling licenses previously issued to E Energija’s subsidiary Latgales Energija, as well as seizing assets and investments in the heating network ‒ the Lithuanian investor was forced to leave the market and abandon its investments. E Energija was unable to successfully protect its rights in the Latvian courts, so it filed a request for arbitration with ICSID in 2012. In its award, ICSID concluded that by allowing these actions and transferring the business to a municipal company, Latvia had violated the bilateral investment protection treaty between Latvia and Lithuania.”

Finally, according to Sorainen, “Latvia had the opportunity to voluntarily enforce the award in 2018, [but] it tried to avoid doing so by applying to annul the award. Nevertheless, the committee ‒ specially set up to review this issue ‒ unequivocally recognized that the award was lawful and the application submitted by Latvia would be rejected. In its decision, the committee likewise acknowledged that Latvia has to cover all costs related to reviewing the application.”

Sorainen’s team included Partner Valts Nerets, Senior Associate Agita Sprude, and Attorneys Daniel Kaasik and Elvis Grinbergs.